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A practical guide to using the climate law to get cheaper solar panels, heat pumps, and more.
Today marks the one year anniversary of the Inflation Reduction Act, the biggest investment in tackling climate change the United States has ever made. The law consists of dozens of subsidies to help individuals, households, and businesses adopt clean energy technologies. Many of these solutions will also help people save money on their energy bills, reduce pollution, and improve their resilience to disasters.
But understanding how much funding is available for what, and how to get it, can be pretty confusing. Many Americans are not even aware that these programs exist. A poll conducted by The Washington Post and the University of Maryland in late July found that about 66% of Americans say they have heard “little” or “nothing at all” about the law’s incentives for installing rooftop solar panels, and 77% have heard little or nothing about subsidies for heat pumps. This tracks similar polling that Heatmap conducted last winter, suggesting not much has changed since then.
Below is Heatmap’s guide to the IRA’s incentives for cutting your carbon footprint at home. If you haven’t heard much about how the IRA can help you decarbonize your life, this guide is for you. If you have heard about the available subsidies, but aren’t sure how much they are worth or where to begin, I’ll walk you through it. (And if you’re looking for information about the electric vehicle tax credit, my colleague at Heatmap Robinson Meyer has you covered with this buyer’s guide.)
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There’s funding for almost every solution you can think of to make your home more energy efficient and reduce your fossil fuel use, whether you want to install solar panels, insulate your attic, replace your windows, or buy electric appliances. If you need new wiring or an electrical panel upgrade before you can get heat pumps or solar panels, there’s some money available for that, too.
The IRA created two types of incentives for home energy efficiency improvements: Unlimited tax credits that will lower the amount you owe when you file your taxes, and $8.8 billion in rebates that function as up-front discounts or post-installation refunds on equipment and services.
The tax credits are available now, but the rebates are not. The latter will be administered by states, which must apply for funding and create programs before the money can go out. The Biden administration began accepting applications at the end of July and expects states to begin rolling out their programs later this year or early next.
The home tax credits are available to everyone that owes taxes. The rebates, however, will have income restrictions (more on this later).
“The Inflation Reduction Act is not a limited time offer,” according to Ari Matusiak, the CEO of the nonprofit advocacy group Rewiring America. The rebate programs will only be available until the money runs out, but, again, none of them have started yet. Meanwhile, there’s no limit on how many people can claim the tax credits, and they’ll be available for at least the next decade. That means you don’t need to rush and replace your hot water heater if you have one that works fine. But when it does break down, you’ll have help paying for a replacement.
You might want to hold off on buying new appliances or getting insulation — basically any improvements inside your house. There are tax credits available for a lot of this stuff right now, but you’ll likely be able to stack them with rebates in the future.
However, if you’re thinking of installing solar panels on your roof or getting a backup battery system, there’s no need to wait. The rebates will not cover those technologies.
A few other caveats: There’s a good chance your state, city, or utility already offers rebates or other incentives for many of these solutions. Check with your state’s energy office or your utility to find out what’s available. Also, it can take months to get quotes and line up contractors to get this kind of work done. If you want to be ready when the rebates hit, it’s probably a good idea to do some of the legwork now.
If you do nothing else this year, consider getting a professional home energy audit. This will cost several hundred dollars, depending on where you live, but you’ll be able to get 30% off or up to $150 back under the IRA’s home improvement tax credit. Doing an audit will help you figure out which solutions will give you the biggest bang for your buck, and how to prioritize them once more funding becomes available. The auditor might even be able to explain all of the existing local rebate programs you’re eligible for.
The Internal Revenue Service will allow you to work with any home energy auditor until the end of this year, but beginning in 2024, you must hire an auditor with specific qualifications in order to claim the credit.
Let’s start with what’s inside your home. In addition to an energy audit, the Energy Efficiency Home Improvement Credit offers consumers 30% off the cost (after any other subsidies, and excluding labor) of Energy Star-rated windows and doors, insulation, and air sealing.
There’s a maximum amount you can claim for each type of equipment each year:
$600 for windows
$500 for doors
$1,200 for air sealing and insulation
The Energy Efficiency Home Improvement Credit also covers heat pumps, heat pump water heaters, and electrical panel upgrades, including the cost of installation for those systems. You can get:
$2,000 for heat pumps
$600 for a new electrical panel
Yes, homeowners can only claim up to $3,200 per year under this program until 2032.
Also, one downside to the Energy Efficiency Home Improvement Credit is that it does not carry over. If you spend enough on efficiency to qualify for the full $3,200 in a given year, but you only owe the federal government $2,000 for the year, your bill will go to zero and you will miss out on the remaining $1,200 credit. So it could be worth your while to spread the work out.
The other big consumer-oriented tax credit, the Residential Clean Energy Credit, offers homeowners 30% off the cost of solar panels and solar water heaters. It also covers battery systems, which store energy from the grid or from your solar panels that you can use when there’s a blackout, or sell back to your utility when the grid needs more power.
The subsidy has no limits, so if you spend $35,000 on solar panels and battery storage, including labor, you’ll be eligible for the full 30% refund, or $10,500. The credit can also be rolled over, so if your tax liability that year is only $5,000, you’ll be able to claim more of it the following year, and continue doing so until you’ve received the full value.
Geothermal heating systems are also covered under this credit. (Geothermal heat pumps work similarly to regular heat pumps, but they use the ground as a source and sink for heat, rather than the ambient air.)
Here’s what we know right now. The IRA funded two rebate programs. One, known as the Home Energy Performance-Based Whole House Rebates, will provide discounts to homeowners and landlords based on the amount of energy a home upgrade is predicted to save.
Congress did not specify which energy-saving measures qualify — that’s something state energy offices will decide when they design their programs. But it did cap the total amount each household could receive, based on income. For example, if your household earns under 80% of the area median income, and you make improvements that cut your energy use by 35%, you’ll be eligible for up to $8,000. If your household earns more than that, you can get up to $4,000.
There’s also the High-Efficiency Electric Home Rebate Program, which will provide discounts on specific electric appliances like heat pumps, an induction stove, and an electric clothes dryer, as well as a new electrical panel and wiring. Individual households can get up to $14,000 in discounts under this program, although there are caps on how much is available for each piece of equipment. This money will only be available to low- and moderate-income households, or those earning under 150% of the area median income.
Renters with a household income below 150% of the area median income qualify for rebates on appliances that they should be able to install without permission from their landlords, and that they can take with them if they move. For example, portable appliances like tabletop induction burners, clothes dryers, and window-unit heat pumps are all eligible for rebates.
It’s also worth noting that there is a lot of funding available for multifamily building owners. If you have a good relationship with your landlord, you might want to talk to them about the opportunity to make lasting investments in their property. Under the performance-based rebates program, apartment building owners can get up to $400,000 for energy efficiency projects.
For the most part, yes. But the calculus gets tricky when it comes to heat pumps.
Experts generally agree that no matter where you live, switching from an oil or propane-burning heating system or electric resistance heaters to heat pumps will lower your energy bills. Not so if you’re switching over from natural gas.
Electric heat pumps are three to four times more efficient than natural gas heating systems, but electricity is so much more expensive than gas in some parts of the country that switching from gas to a heat pump can increase your overall bills a bit. Especially if you also electrify your water heater, stove, and clothes dryer.
That being said, Rewiring America estimates that switching from gas to a heat pump will lower bills for about 60% of households. Many utilities offer tools that will help you calculate your bills if you make the switch.
The good news is that all the measures I’ve discussed in this article are expected to cut carbon emissions and pollution, even if most of your region’s electricity still comes from fossil fuels. For some, that might be worth the monthly premium.
Tax Credit #1 offers 30% off the cost of energy audits, windows, doors, insulation, air sealing, heat pumps, electrical panels, with a $3200-per-year allowance and individual item limits.
Tax Credit #2 offers 30% off the cost of solar panels, solar water heaters, batteries, and geothermal heating systems.
Rebate Program #1 will offer discounts on whole-home efficiency upgrades depending on how much they reduce your energy use, with an $8,000 cap for lower-income families and a $4,000 cap for everyone else.
Rebate Program #2 is only for low- and moderate- income households, and will offer discounts on specific electric appliances, with a $14,000 cap.
Read more about the Inflation Reduction Act:
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Businesses were already bracing for a crash. Then came another 50% tariff on Chinese goods.
When I wrote Heatmap’s guide to driving less last year, I didn’t anticipate that a good motivation for doing so would be that every car in America was about to get a lot more expensive.
Then again, no one saw the breadth and depth of the Trump administration’s tariffs coming. “We would characterize this slate of tariffs as ‘worse than the worst case scenario,’” one group of veteran securities analysts wrote in a note to investors last week, a sentiment echoed across Wall Street and reflected in four days of stock market turmoil so far.
But if the economic downturn has renewed your interest in purchasing a bike or e-bike, you’ll want to act fast — and it may already be too late. Because Trump’s “Liberation Day” tariffs stack on top of his other tariffs and duties, the U.S. bicycle trade association PeopleForBikes calculated that beginning on April 9, the day the newest tariffs come into effect, the duty on e-bikes from China would be 79%, up from nothing at all under President Biden. The tariff on most non-electric bikes from China, meanwhile, would spike to 90%, up from 11% on January 1 of this year. Then on Tuesday, the White House announced that it would add another 50% tariff on China on top of that whole tariff stack, starting Wednesday, in retaliation for Beijing’s counter-tariffs.
Prior to the latest announcement, Jay Townley, a founding partner of the cycling industry consulting firm Human Powered Solutions, had told me that if the Trump administration actually followed through on a retaliatory 50% tariff on top of those duties, then “we’re out of business because nobody can afford to bring in a bicycle product at 100% or more in tariffs.”
It’s difficult to overstate how existential the tariffs are for the bicycle industry. Imports account for 97% of the bikes purchased in the United States, of which 87% come from China, making it “one of the most import-dependent and China-dependent industries in the U.S.,” according to a 2021 analysis by the Coalition for a Prosperous America, which advocates for trade-protectionist policies.
Many U.S. cycling brands have grumbled for years about America’s relatively generous de minimis exemption, a policy of waiving duties on items valued at less than $800. The loophole — which is what enables shoppers to buy dirt-cheap clothes from brands like Temu, Shein, and Alibaba — has also allowed for uncertified helmets and non-compliant e-bikes and e-bike batteries to flood the U.S. market. These batteries, which are often falsely marketed as meeting international safety standards, have been responsible for deadly e-bike fires in places like New York City. “A going retail for a good lithium-ion replacement battery for an e-bike is $800 to $1,000,” Townley said. “You look online, and you’ll see batteries at $350, $400, that come direct to you from China under the de minimis exemption.”
Cyclingnews reported recently that Robert Margevicius, the executive vice president of the American bicycle giant Specialized, had filed a complaint with the Trump administration over losing “billions in collectable tariffs” through the loophole. A spokesperson for Specialized defended Margevicius’ comment by calling it an “industry-wide position that is aligned with PeopleForBikes.” (Specialized did not respond to a request for clarification from Heatmap, though a spokesperson told Cyclingnews that de minimis imports permit “unsafe products and intellectual property violation.” PeopleForBikes’ general and policy counsel Matt Moore told me in an email that “we have supported reforming the way the U.S. treats low-value de minimis imports for several years.”)
Trump indeed axed China’s de minimis exemption as part of his April 2 tariffs — a small win for the U.S. bicycle brands. But any protection afforded by duties on cheap imported bikes and e-bikes will be erased by the damage from high tariffs imposed on China and other Asian countries. Fewer than 500,000 bicycles in a 10 million-unit market are even assembled in the United States, and essentially none is entirely manufactured here. “We do not know how to make a bike,” Townley told me flatly. Though a number of major U.S. brands employ engineers to design their bikes, when it comes to home-shoring manufacturing, “all of that knowledge resides in Taiwan, China, Vietnam. It isn’t here.”
In recent years, Chinese factories had become “very proficient at shipping goods from third-party countries” in order to avoid European anti-dumping duties, as well as leftover tariffs from Trump’s first term, Rick Vosper, an industry veteran and columnist at Bicycle Retailer and Industry News, told me. “Many Chinese companies built bicycle assembly plants in Vietnam specifically so the sourcing sticker would not say ‘made in China,’” he added. Of course, those bikes and component parts are now also subject to Trump’s tariffs, which are as high as 57% for Vietnam, 60% for Cambodia, and 43% for Taiwan for most bikes. (A potential added tariff on countries that import oil from Venezuela could bump them even higher.)
The tariffs could not come at a worse time for the industry. 2019 marked one of the slowest years for the U.S. specialty retail bike business in two decades, so when COVID hit — and suddenly everyone wanted a bicycle as a way of exercising and getting around — there was “no inventory to be had, but a huge influx of customers,” Vosper told me. In response, “major players put in huge increases in their orders.”
But by 2023, the COVID-induced demand had evaporated, leaving suppliers with hundreds of millions of dollars in inventory that they couldn’t move. Even by discounting wholesale prices below their own cost to make the product and offering buy-one-get-one deals, dealers couldn’t get the bikes off their hands. “All the people who wanted to buy a bike during COVID have bought a bike and are not ready to buy another one anytime soon,” Vosper said.
Going into 2025, many retailers were still dealing with the COVID-induced bicycle glut; Mike Blok, the founder of Brooklyn Carbon Bike Company in New York City, told me he could think of three or four tristate-area shops off the top of his head that have closed in recent months because they were sitting on inventory.
Blok, however, was cautiously optimistic about his own position. While he stressed that he isn’t a fan of the tariffs, he also largely sells pre-owned bikes. On the low end of the market, the tariffs will likely raise prices no more than about $15 or $20, which might not make much of a difference to consumer behavior. But for something like a higher-end carbon fiber bike, which can run $2,700 or higher and is almost entirely produced in Taiwan, the tariffs could mean an increase of hundreds of dollars for customers. “I think what that will mean for me is that more folks will be open to the pre-owned option,” Blok said, although he also anticipates his input costs for repairs and tuning will go up.
But there’s a bigger, and perhaps even more obvious, problem for bike retailers beyond their products becoming more expensive. “What I sell is not a staple good; people don’t need a bike,” Blok reminded me. “So as folks’ discretionary income diminishes because other things become more expensive, they’ll have less to spend on discretionary items.”
Townley, the industry consultant, confirmed that many major cycling brands had already seen the writing on the wall before Trump announced his tariffs and begun to pivot to re-sale. Bicycling Magazine, a hobbyist publication, is even promoting “buying used” as one of its “tips to help you save” under Trump’s tariffs. Savvy retailers might be able to pivot and rely on their service, customer loyalty, and re-sale businesses to stay afloat during the hard days ahead; Moore of PeopleForBikes also noted that “repair services may increase” as people look to fix what they already have.
And if you don’t have a bike or e-bike but were thinking about getting one as a way to lighten your car dependency, decarbonize your life, or just because they’re cool, “there are still good values to be found,” Moore went on. “Now is a great time to avoid a likely increase in prices.” Townley anticipated that depending on inventory, we’re likely 30 to 40 days away from seeing prices go up.
In the meantime, cycling organizations are scrambling to keep their members abreast of the coming changes. “PeopleForBikes is encouraging our members to contact their elected representatives about the very real impacts these tariffs will have on their companies and our industry,” Moore told me. The National Bicycle Dealers Association, a nonprofit supporting specialty bicycle retailers, has teamed up with the D.C.-based League of American Bicyclists, a ridership organization, to explore lobbying lawmakers for the first time in decades in the hopes that some might oppose the tariffs or explore carve-outs for the industry.
But Townley, whose firm Human Powered Solutions is assisting in NBDA’s effort, shared a grim conversation he had at a recent trade show in Las Vegas, where a new board member at a cycling organization had asked him “what can we do” about Trump’s tariffs.
“I said, ‘You’re out of time,” Townley recalled. “There isn’t much that can be done. All we can do is react.”
Any household savings will barely make a dent in the added costs from Trump’s many tariffs.
Donald Trump’s tariffs — the “fentanyl” levies on Canada, China, and Mexico, the “reciprocal” tariffs on nearly every country (and some uninhabited islands), and the global 10% tariff — will almost certainly cause consumer goods on average to get more expensive. The Yale Budget Lab estimates that in combination, the tariffs Trump has announced so far in his second term will cause prices to rise 2.3%, reducing purchasing power by $3,800 per year per household.
But there’s one very important consumer good that seems due to decline in price.
Trump administration officials — including the president himself — have touted cheaper oil to suggest that the economic response to the tariffs hasn’t been all bad. On Sunday, Secretary of the Treasury Scott Bessent told NBC, “Oil prices went down almost 15% in two days, which impacts working Americans much more than the stock market does.”
Trump picked up this line on Truth Social Monday morning. “Oil prices are down, interest rates are down (the slow moving Fed should cut rates!), food prices are down, there is NO INFLATION,” he wrote. He then spent the day posting quotes from Fox Business commentators echoing that idea, first Maria Bartiromo (“Rates are plummeting, oil prices are plummeting, deregulation is happening. President Trump is not going to bend”) then Charles Payne (“What we’re not talking about is, oil was $76, now it’s $65. Gasoline prices are going to plummet”).
But according to Neil Dutta, head of economic research at Renaissance Macro Research, pointing to falling oil prices as a stimulus is just another example of the “4D chess” theory, under which some market participants attribute motives to Trump’s trade policy beyond his stated goal of reducing trade deficits to as near zero (or surplus!) as possible.
Instead, oil markets are primarily “responding to the recession risk that comes from the tariff and the trade war,” Dutta told me. “That is the main story.” In short, oil markets see less global trade and less global production, and therefore falling demand for oil. The effect on household consumption, he said, was a “second order effect.”
It is true that falling oil prices will help “stabilize consumption,” Dutta told me (although they could also devastate America’s own oil industry). “It helps. It’ll provide some lift to real income growth for consumers, because they’re not spending as much on gasoline.” But “to fully offset the trade war effects, you basically need to get oil down to zero.”
That’s confirmed by some simple and extremely back of the envelope math. In 2023, households on average consumed about 700 gallons of gasoline per year, based on Energy Information Administration calculations that the average gasoline price in 2023 was $3.52, while the Bureau of Labor Statistics put average household gasoline expenditures at about $2,450.
Let’s generously assume that due to the tariffs and Trump’s regulatory and diplomatic efforts, gas prices drop from the $3.26 they were at on Monday, according to AAA, to $2.60, the average price in 2019. (GasBuddy petroleum analyst Patrick De Haanwrote Monday that the tariffs combined with OPEC+ production hikes could lead gas prices “to fall below $3 per gallon.”)
Let’s also assume that this drop in gas prices does not cause people to drive more or buy less fuel-efficient vehicles. In that case, those same 700 gallons cost the average American $1,820, which would generate annual savings of $630 on average per household. If we went to the lowest price since the Russian invasion of Ukraine, about $3 per gallon, total consumption of 700 gallons would cost a household about $2,100, saving $350 per household per year.
That being said, $1,820 is a pretty low level for annual gasoline consumption. In 2021, as the economy was recovering from the Covid recession and before gas prices popped, annual gasoline expenditures only got as low as $1,948; in 2020 — when oil prices dropped to literally negative dollars per barrel and gas prices got down to $1.85 a gallon — annual expenditures were just over $1,500.
In any case, if you remember the opening paragraphs of this story, even the most generous estimated savings would go nowhere near surmounting the overall rise in prices forecast by the Yale Budget Lab. $630 is less than $3,800! (JPMorgan has forecast a more mild increase in prices of 1% to 1.5%, but agrees that prices will likely rise and purchasing power will decline.)
But maybe look at it this way: You might be able to drive a little more than you expected to, even as your costs elsewhere are going up. Just please be careful! You don’t want to get into a bad accident and have to replace your car: New car prices are expected to rise by several thousand dollars due to Trump’s tariffs.
With cars about to get more expensive, it might be time to start tinkering.
More than a decade ago, when I was a young editor at Popular Mechanics, we got a Nissan Leaf. It was a big deal. The magazine had always kept long-term test cars to give readers a full report of how they drove over weeks and months. A true test of the first true production electric vehicle from a major car company felt like a watershed moment: The future was finally beginning. They even installed a destination charger in the basement of the Hearst Corporation’s Manhattan skyscraper.
That Leaf was a bit of a lump, aesthetically and mechanically. It looked like a potato, got about 100 miles of range, and delivered only 110 horsepower or so via its electric motors. This made the O.G. Leaf a scapegoat for Top Gear-style car enthusiasts eager to slander EVs as low-testosterone automobiles of the meek, forced upon an unwilling population of drivers. Once the rise of Tesla in the 2010s had smashed that paradigm and led lots of people to see electric vehicles as sexy and powerful, the original Leaf faded from the public imagination, a relic of the earliest days of the new EV revolution.
Yet lots of those cars are still around. I see a few prowling my workplace parking garage or roaming the streets of Los Angeles. With the faded performance of their old batteries, these long-running EVs aren’t good for much but short-distance city driving. Ignore the outdated battery pack for a second, though, and what surrounds that unit is a perfectly serviceable EV.
That’s exactly what a new brand of EV restorers see. Last week, car site The Autopiancovered DIYers who are scooping up cheap old Leafs, some costing as little as $3,000, and swapping in affordable Chinese-made 62 kilowatt-hour battery units in place of the original 24 kilowatt-hour units to instantly boost the car’s range to about 250 miles. One restorer bought a new battery on the Chinese site Alibaba for $6,000 ($4,500, plus $1,500 to ship that beast across the sea).
The possibility of the (relatively) simple battery swap is a longtime EV owner’s daydream. In the earlier days of the electrification race, many manufacturers and drivers saw simple and quick battery exchange as the solution for EV road-tripping. Instead of waiting half an hour for a battery to recharge, you’d swap your depleted unit for a fully charged one and be on your way. Even Tesla tested this approach last decade before settling for good on the Supercharger network of fast-charging stations.
There are still companies experimenting with battery swaps, but this technology lost. Other EV startups and legacy car companies that followed Nissan and Tesla into making production EVs embraced the rechargeable lithium-ion battery that is meant to be refilled at a fast-charging station and is not designed to be easily removed from the vehicle. Buy an electric vehicle and you’re buying a big battery with a long warranty but no clear plan for replacement. The companies imagine their EVs as something like a smartphone: It’s far from impossible to replace the battery and give the car a new life, but most people won’t bother and will simply move on to a new car when they can’t take the limitations of their old one anymore.
I think about this impasse a lot. My 2019 Tesla Model 3 began its life with a nominal 240 miles of range. Now that the vehicle has nearly six years and 70,000 miles on it, its maximum range is down to just 200, while its functional range at highway speed is much less than that. I don’t want to sink money into another vehicle, which means living with an EV’s range that diminishes as the years go by.
But what if, one day, I replaced its battery? Even if it costs thousands of dollars to achieve, a big range boost via a new battery would make an older EV feel new again, and at a cost that’s still far less than financing a whole new car. The thought is even more compelling in the age of Trump-imposed tariffs that will raise already-expensive new vehicles to a place that’s simply out of reach for many people (though new battery units will be heavily tariffed, too).
This is no simple weekend task. Car enthusiasts have been swapping parts and modifying gas-burning vehicles since the dawn of the automotive age, but modern EVs aren’t exactly made with the garage mechanic in mind. Because so few EVs are on the road, there is a dearth of qualified mechanics and not a huge population of people with the savvy to conduct major surgery on an electric car without electrocuting themselves. A battery-replacing owner would need to acquire not only the correct pack but also potentially adapters and other equipment necessary to make the new battery play nice with the older car. Some Nissan Leaf modifiers are finding their replacement packs aren’t exactly the same size, shape or weight, The Autopian says, meaning they need things like spacers to make the battery sit in just the right place.
A new battery isn’t a fix-all either. The motors and other electrical components wear down and will need to be replaced eventually, too. A man in Norway who drove his Tesla more than a million miles has replaced at least four battery packs and 14 motors, turning his EV into a sort of car of Theseus.
Crucially, though, EVs are much simpler, mechanically, than combustion-powered cars, what with the latter’s belts and spark plugs and thousands of moving parts. The car that surrounds a depleted battery pack might be in perfectly good shape to keep on running for thousands of miles to come if the owner were to install a new unit, one that could potentially give the EV more driving range than it had when it was new.
The battery swap is still the domain of serious top-tier DIYers, and not for the mildly interested or faint of heart. But it is a sign of things to come. A market for very affordable used Teslas is booming as owners ditch their cars at any cost to distance themselves from Elon Musk. Old Leafs, Chevy Bolts and other EVs from the 2010s can be had for cheap. The generation of early vehicles that came with an unacceptably low 100 to 150 miles of range would look a lot more enticing if you imagine today’s battery packs swapped into them. The possibility of a like-new old EV will look more and more promising, especially as millions of Americans realize they can no longer afford a new car.